Guillermo v. Starting C & M Corp.

Background

Alicia Carmen Guillermo brought claims under the Fair Labor Standards Act and the New York Labor Law. The parties informed the court that they had agreed to settle. Guillermo submitted a signed settlement agreement between herself and Martin Collado and Starting C & M Corp. d/b/a Andy’s Restaurant.

Under the agreement, Guillermo released wage claims against Collado and Andy’s Restaurant in exchange for a $60,000 payment. Of that amount, $20,611.65 would go to her counsel for attorneys’ fees and costs. The agreement contained no confidentiality provision, general release, or non-disparagement clause. The opinion also states that Guillermo voluntarily dismissed claims against the remaining defendants without prejudice.

Settlement approval

The court applied the Second Circuit’s requirement that a district court or the Department of Labor approve private settlements of Fair Labor Standards Act claims. It considered the fairness factors from Wolinsky v. Scholastic, Inc., including the possible recovery, the litigation expenses and risks avoided by settlement, the parties’ bargaining process, and possible fraud or collusion.

Guillermo estimated that her total recoverable amount was $133,425. After fees and costs, she would receive $39,388.35, approximately 29.5% of that estimate. The court found this amount fair and reasonable. It also noted that the case was still in its early stages, with fact discovery incomplete, so settlement would avoid additional expenses and litigation risks.

The court observed that both sides were represented by counsel and found no indication of fraud or collusion. It also stated that Guillermo no longer worked for the defendants, reducing concerns that job-related pressure affected her decision to settle.

Attorneys’ fees and costs

The settlement allocated $20,611.65 to Guillermo’s counsel, including $947 in out-of-pocket costs. The court stated that this amount represented approximately 33% of the net settlement amount and found the fees reasonable. It declined to compare the one-third contingency fee with counsel’s actual hours worked through a separate hourly-fee calculation, explaining that the fee arrangement had been agreed to in advance and compensated counsel for the risk of litigating the case.

Disposition

The court approved the settlement and dismissed the case with prejudice. It directed the Clerk of Court to close the case. The dismissal with prejudice in the conclusion is distinct from the opinion’s statement that Guillermo voluntarily dismissed claims against the remaining defendants without prejudice.